Balkanization and assimilation: Examining the effects of state-created homogeneity

Peter Leeson

Review of Social Economy, 2007, vol. 65, issue 2, 141-164

Abstract: This paper investigates the effects of state-created homogeneity on the ability of socially distant individuals to trade. I show that where the state is absent, socially distant agents adopt the customs, practices and institutions of outsiders they desire to interact with. By creating a degree of homogeneity, agents signal their credibility to each other. These signals, in turn, enable inter-group exchange. Formal institutions provided by government can create noise in these signals. This noise incapacitates the information mechanism employed by heterogeneous agents to enable trade.

Keywords: homogeneity; institutions; self-enforcement; balkanization; assimilation (search for similar items in EconPapers)
Date: 2007
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DOI: 10.1080/00346760600709960

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